On March 11, 2010, Mr. Patel was granted permission to demolish the old American Motel Lodge and start construction of a 77-unit, three-story, 45,000-square-foot hotel. On July 9, the Zoning Board of Appeals shot down a request for a parking variance that Mr. Patel said was necessary to make the project work.

The parcel is surrounded by three main roads — Cove Drive, New Boston Road and Main Street (Route 20) — which calls for a 50-foot setback on all three sides.

When town Conservation Agent Glenn Colburn found a vernal pool on the site, Mr. Patel had to revise his site plan.

The Planning Board requires 192 parking spaces for the project. Mr. Patel is asking for 200. To reach 200 parking spaces, he had to extend 20 feet beyond the 50-foot buffer on the Cove Drive side.

On July 9, six of the seven Zoning Board of Appeals members were present to vote on the parking variance, which needed a "super majority" of five votes to pass.

The vote was 4-2 in favor, with ZBA members Christopher Mattioli and Elizabeth Banks voting against. Mary Ann Thorpe was absent. As a result, the request for the variance was denied.

On Wednesday, Mr. Mattioli recused himself because of an impeding ethics investigation.

Town Administrator Shaun A. Suhoski has asked the State Ethics Commission to look into a possible conflict of interest involving Mr. Mattioli and the "ultimate denial" of a crucial variance for the proposed hotel project.

In his letter, Mr. Suhoski, who is now the town administrator in Athol, said Mr. Mattioli may have used his position as business manager for the New England Regional Council of Carpenters in hopes of benefiting the union he works for.

On Wednesday, Ms. Banks spoke against and voted against allowing Mr. Patel to withdraw his variance without prejudice.

"This process is circumventing normal ZBA rules and regulations," Ms. Banks said. "There was a hearing. There was a close. There was a vote. And then it wasn't filed with the town clerk because several people got together and decided how they can stop this problem. We're not going to file with the town clerk. So it will allow the person to withdraw."

ZBA Chair Tom Creeden said in a vast majority of times, ZBA decisions are filed within 48 hours because the town planner was on vacation.

And, because of "extenuating circumstances," Mr. Creeden concluded that there was a possibility that Mr. Patel did not get a "fair hearing," when he asked for a parking variance last month.

"There are things found out after the hearing and there's a possibility he did not receive a fair hearing," Mr. Creeden said. "And that's why it (the decision) was never filed…He (Mr. Patel) did not get a 100 percent fair hearing.

Ms. Banks said she voted against because she doesn't have "all the facts" that Mr. Creeden alluded to.